How to make workers more productive without paying them more

Jessica Morris
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Non-financial incentives aren't the most reliable (Source: Getty)

It's a question most managers are eager to know the answer to: How can a company make its employees more productive without paying them more?

A new study by economists Michael Kosfeld, Susanne Neckermann, and Xiaolan Yang — published on the economics commentary website VoxEU — observed 413 students doing data-entry to find out.

It defined meaningful work as something with a higher purpose, or which is positively recognised by the public.

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The study showed that the output of employees who believed they were working on an important task was about 15 per cent higher. "Knowing that you matter really matters, which suggests that the provision of meaning can be a low-cost instrument to stimulate work-effort," it said.

Moreover, in a low meaning role, public recognition can also add about 18 per cent to an employee's performance.

Financial incentives can also increase employee performance by five to eight per cent, regardless of how meaningful the work is.

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However, while non-monetary incentives produce the most productive workers, these aren't always the most reliable. "Non-monetary incentives can be quite sensitive to changes in the work context and environment — and in particular, more sensitive compared to monetary incentives," it added.

Similarly, while meaning and public recognition increase productivity alone, together they add nothing. "The effects of meaning and recognition are substitutive," it continued.

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